Mass. Marketers Confront State’s Pro-Gas Initiative

Like their colleagues in Connecticut and New York State, Massachusetts Oilheat marketers find themselves fighting an apparent alliance of state regulators and utilities bent on replacing heating oil with natural gas.

Michael Ferrante, President of the Massachusetts Energy Marketers Association (MEMA), said that the Department of Energy Resources (DOER) has hired a consulting firm with strong ties to the utility industry to develop a plan for expanding gas heat in the Commonwealth.
The plan under study by the DOER and the consulting firm, Sussex Economic Advisors, would convert as many as 900,000 Massachusetts customers to gas heat.

A similar plan in Connecticut is designed to convert 300,000 homes, and utility regulators in New York State are developing a plan to convert as many as 1.1 million homes.

Accelerating Fuel Conversions
“We see DOER’s efforts—especially their work to find pathways to accelerate conversions to natural gas—as a very serious threat to the retail heating oil industry in Massachusetts,” Ferrante said.

Officials at the DOER have told Ferrante that they are working to bring the state in compliance with the Global Warming Solutions Act that the state enacted in 2008. That law requires the state to reduce greenhouse gas emissions by 25 percent from 1990 levels by 2025 and by 80 percent by 2050. As part of that initiative, DOER has also commissioned studies on renewable fuels such as solar, wood and biomass.

Ferrante said the DOER seems to have turned its back on the state’s Oilheat dealers. “This is the same energy office that passed the nation’s first Bioheat® heating oil mandate, and now we have biofuels as an afterthought when they should not be,” he said. “Biofuel was fine in 2008 and 2009, and it’s a great way for our industry to build a renewable fuel base. It makes you angry, because you hope that state officials will govern and not try to erode a particular sector of the state’s economy.”

“Our Board of Directors has been kept abreast of these troubling proceedings, and given that Massachusetts is the third largest heating oil market in the U.S., there’s plenty at stake here, including the livelihood of hundreds or heating oil operations and the fate of thousands of industry employees,” Ferrante said.

He said the natural gas plan being discussed by the DOER and Sussex Economic Advisors is designed to change the utility gas rate structure and spread the cost of new gas conversions over the entire rate base.

Fighting Back
The DOER has designated MEMA as a stakeholder in the process, and the association will file multiple reports regarding the environmental effects of natural gas, heating oil and wood as well as the price outlook for natural gas and oil.

“We must intervene and provide state officials with solid data that speaks to the economic strength of the Oilheat industry in the region and also counters the pervasive view that natural gas is cleaner, environmentally benign and a more cost-effective and efficient fuel,” Ferrante added. “We have to slow this freight train down.”

Recent government and academic reports have highlighted problems with natural gas, including a study commissioned by U.S. Sen. Edward J. Markey (D-Mass.) indicating that American consumers paid at least $20 billion from 2000-2011 for gas that was unaccounted for and never used. Ferrante said MEMA will draw on that report, as well as reports of extensive gas leaks by Boston University Associate Professor Nathan Phillips and the Conservation Law Foundation.

Experts Pitch In
MEMA is also preparing a report on the economic benefits that the heating oil industry provides, including thousands of jobs. John Huber, President of the National Oilheat Research Alliance, and Richard Sweetser, President of Exergy Partners, are helping to develop documentation.
MEMA is also receiving support from Dr. Thomas Butcher, head of the Energy Resources Division at Brookhaven National Laboratory, who will testify about emissions from wood burning, which are far more harmful than Oilheat emissions. “There is a lot of evidence that wood biomass is one of the dirtiest fuels,” Ferrante said.

In addition to opposing the DOER’s initiatives, MEMA is also defending Oilheat with a fall radio advertising campaign in conjunction with the American Energy Coalition (AEC). “AEC is doing a great job of keeping this message out in front of the public,” he said.
“Our challenge now is price. No question people like the service from Oilheat, but what is driving people now is the economics,” Ferrante added. “We have to find our way around that and build a case for Oilheat and Bioheat® heating oil and focus on what we can do on efficiency and cleanliness.”